E-mail address is taken If this is your account, sign in here. Between 5 and 30 characters. No spaces please The Profile Name is already in use. I used different accounts for valuation gains and losses, as well as different ones for exchange gains and losses.
I didn't configure any balanced sheet adjustments accounts. Kindly assist Regards Tatenda Join this group. The receivable an asset is valued at 60 units of local currency INR. Therefore, reality indicates that your receivable which was raised once for 60 INR is actually worth 55 INR only which means that you would be incurring a forex loss of 5 INR. You need to account for the same and the Foreign currency valuation program generates an accounting entry debiting Forex valuation Loss of 5 INR shown in the profit and loss statement and an equivalent credit entry in the Balance Sheet Adjustment Account.
This, as you can see, is rendered possible through the balance sheet adjustment account. Help the community by fixing grammatical or spelling errors, summarizing or clarifying the solution, and adding supporting information or resources.
Always respect the original author. Edits are subject to review by community moderators. Original answer by Vidhya Dhar Nov 7, Hi Tatenda, Let us take the case of a customer invoice Reply from Vidhya Dhar Nov 7, Mark this reply as the best answer? Choose carefully, this can't be changed. KDB is the transaction used for account determination relating to General Ledger Balance Sheet Accounts maintained without open item management hence managed and computed on the closing balance on the key date.
Account determination involves a minimum of one expense account and one gain account for realization differences. It also involves a minimum of one expense account, one gain account and a balance sheet adjustment account. However, your account determination could involve multiple sets of such accounts if you want your account determination to be more descriptive say separate accounts maintained foreign currency and or currency type specifically.
What beats me is your statement that balance sheet adjustment account has not been configured. Basically, the closing entry for valuation would be: Please check your configuration again.
You say that zero value is posted when forex valuation program is run. Do you get an accounting entry with zero value? If that be the case, then please look into the general ledger accounts debited and credited in such an entry.
It is quite possible that the zero value appears in foreign currency. Please try to include the 'Amount in local currency' field in your document lay out and see if you get non-zero value. Please also check what valuation procedure is used by you.
Please also check if the posting happens in a different ledger and not the non leading ledger if you have configured so.
Hi VidhyaDhar, Thanks for your response which is very helpful and to the point. Could you kindly explain how the balance sheet adjustment account works. Because from your explanation it seems very crucial.
That's the other part I am really failing to get. Hi VidhyaDhar Thank you very much for helpful response. Could you kindly explain how the Balance Sheet Adjustment Account works in foreign currency valuation because it seems from your response it is a very crucial aspect that needs to be assigned.
White Papers and Webcasts. Hi VidhyaDhar Thank you very much for your assistance. It was very helpful and now I understand better. Hi VidhyaDhar Could you kindly explain for me the expected postings for foreign currency valuation in this scenario: I entered a vendor invoice in foreign currency.
At time of payment, the exchange rate was different. The payment was a partial payment of the invoice value. The payment document comes out like this in local currency: Your assistance is greatly appreciated. Hi gurus Could you kindly explain for me the expected postings for foreign currency valuation in this scenario: FC Valuation occurs for reporting purposes on open items or closing balances. Clearing differences occur at the time of receiving or making payments.
Your case seems to be a realization difference since a payment is involved. It has nothing to do with foreign currency valuation as regards payments received. Hi Tatenda, This is regarding your second query, There are two scenarios here when we talk about Foreign Currency Transactions. Realized Loss or Gain 2. The transactions which were posted in the Foreign currency, when being cleared, The system will automatically picks the most recent exchange rates from the the tables and post the Loss or Gain obtained there by to the GL accounts, given in the customization.
This is transaction has been completed by two ways, and there is no need of Valuation to be done on this, as the loss or gain has been realized. Subsequent to the Clearing, even if you try to do the same, the system cannot find the Open item on which you have to calculate the Foreign currency exchange differences, as it has already been cleared. When it comes to Unrealized part, it itself means that, the transaction is not been cleared. For these items, at the month end or period end, we will valuate the Foreign Currency Loss or gain.
This is just a Notional amount, with is not yet been accrued or incurred. So we pass a transaction on the Month end and we reverse the same in the first of the next month. When we come to the first query, Need some more explanation. Are you doing the Residual Clearing or Partial Clearing. To my knowledge, only if it is residual Clearing, it creates separate line item for the payment differences, for the Vendor.
There is the problem with Residual Clearing, as the newly formed line item takes Clearing date as its posting date. Because of this the valuation will not be correctly I guess. To let you know on this, you should also tell what is the Foreign currency, Local currency and Exchange rate between those two. But If you run the Valuation on the same date of the Document posting date, if what i understood is correct, then no Exchange loss or gain will be captured as the Line item with This thread has been closed due to inactivity.
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